Sub-Saharan Africa econ to grow 6.5 pct in '08: IMF

By Daniel Bases

WASHINGTON (Reuters) - Oil exporting nations in Sub-Saharan Africa will help push economic growth up 6.5 percent in 2008, but the global credit crisis threatens to shut off sources of external financing, putting the growth outlook at risk, the International Monetary Fund said on Saturday.

Sub-Saharan Africa has benefited in recent years from the export of higher-priced food and fuel, increases in foreign direct investment, and decline in armed conflicts.

But the impact of these factors are not distributed equally within the region. While high prices for energy will benefit a handful of countries like Nigeria or Angola, the majority of countries will suffer increased costs and inflation.

As a region, inflation is forecast to hit 8.5 percent in 2008, the IMF said.

"Unfortunately, as you are aware, the external environment has recently become less favorable, so risks for 2008 are tilted to the downside," said Benedicte Christensen, the head of the IMF's Africa department told reporters on Saturday.

"The recent spikes in oil and food prices are raising economic and social challenges for many countries. This is particularly hard on the poor. Several countries have already experienced food riots," she said.

Sub-Saharan Africa has shown limited reaction so far to the global financial market stresses, but prolonged trouble could cause foreign investors feeling pain in developed markets to pull their money from these more risky ventures, the IMF warned.

"In light of these risks, there is about a one-in-five chance that in 2008 growth in sub-Saharan Africa will fall to less than 5 percent," the IMF's regional economic report said.

Growth was 6.6 percent in 2007. The IMF estimates that if European Union economic growth drops by one percentage point, sub-Saharan Africa's GDP will slow by a 0.25 percentage point.

The subprime mortgage crisis that emanated from the United States and has sent shockwaves throughout the global financial system puts many countries in Africa, with nascent market economies and still developing fiscal and regulatory frameworks, at risk of losing hard-fought economic success.

"Tax or tariff interventions should be considered only as a temporary measure if other steps are not available quickly enough to address social tensions," Christensen said.

Private capital inflows into sub-Saharan African countries, most of which are at the riskier end of the investment scale, have more than quadrupled since 2000, the IMF said.

The IMF estimates that in 2007, cash from private equity and debt sales amounted to about $53 billion, still tiny compared to total global capital inflows of $6.4 trillion in 2006.

"In 2006, private capital flows to sub-Saharan Africa overtook official aid for the first time," the report said, noting that while most of the money went to South Africa and Nigeria, other countries saw increases too.

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